The rethinking of social housing

If you’re not careful you can lose sight of quite how far housing policy has travelled in a relatively short space of time. Some of the fixed points in the housing policy debate have been destabilised. Grant Shapps talks of radical change and the need to disturb the “lazy consensus” in housing policy. I would agree that there has been a considerable degree of consensus. But I don’t think it was a product of laziness.

Making sense of what is happening, while it is happening, is no easy task.

Housing at the dawn of New Labour

Where had we reached in the social housing story by the dawn of the New Labour era? We’d witnessed a significant decline in the overall social housing stock, primarily as a result of around 2 million local authority properties being sold under the Right to Buy. Sales were concentrated in the better quality parts of the housing stock in more desirable neighbourhoods. We had witnessed tenure restructuring within social housing, from an overwhelming dominance for local authority housing in 1980 to a more plural system. We had pretty much reached parity in scale between the local authority and housing association sector by the late 2000s. Local authority tenants mostly occupied their properties on secure tenancies – “lifetime” tenancies in tabloid-speak – while housing associations principally offered assured tenancies. Properties within the social sector were increasingly being allocated on the basis of complex points systems that sought to make objective assessments of applicants’ housing need and to ensure that properties were let to those with comparatively high levels of need. Local authorities were under a legal duty to show ‘reasonable preference’ to certain categories of household, including those deemed statutorily homeless. Housing associations were also absorbing a proportion of households with high social and housing needs as a consequence of their duty to cooperate and letting properties under nomination agreements with local authorities.

The combined effect of a declining housing stock and an increasing focus upon housing need meant that for many local authorities an increasing proportion of lettings were going to people with complex problems. Social housing was being transformed from the mass housing tenure of the 1950s and 1960s – mainstream, indeed aspirational, housing accommodating a third of the population at its peak – to a residual ‘safety net’ for certain types of qualifying household who are unable to meet their housing needs through the market. As a consequence, policy makers at local and national level were becoming increasingly concerned about concentrations of social disadvantage in social housing, which in turn meant increased spatial concentrations of disadvantage and social segregation.

The New Labour way

Overlaid upon this situation was New Labour’s brand of housing policy. Policy towards social housing fully embraced the ‘choice in public services’ agenda. Indeed, housing was seen to be in the vanguard of the consumerisation of public services. As well as provider diversity, New Labour pursued rent restructuring to impose a more market-like pattern of rents upon social housing in order to create more “rational” financial incentives for consumers. They imported choice-based lettings from the Netherlands in order to move away from the bureaucratic allocation of properties, which placed the housing officer in control. Instead there was an increased expectation that applicants would be active in finding solutions to their housing needs. They were expected to participate in bidding processes in order to secure a property. The aspiration was for choice-based lettings to be operating in all English local authorities by the end of 2010. New Labour also, in a way that perhaps slightly contradicts the overarching narrative of shortage, relaxed to registration requirements for social housing in 2002. This meant that anyone, regardless of housing need, could register with the social housing system. This did not necessarily mean that those with no housing need were any more likely to gain access to a social rented property – but they would still show up on the system.

Housing policy was seen in the context of broader urban policies around creating sustainable communities. Part of the prescription for sustainable communities was diversifying tenure at local level – breaking up mono-tenurial local authority estates by developing not only housing association rented properties but also shared ownership or low cost home ownership properties. The policy was based upon the assumption that tenure diversification leads to greater income and social diversity. This in turn has, by assumption, positive impacts upon the way in which neighbourhoods function and upon their reputation. Within the social housing sector the change from systems of allocation to choice-based letting was also seen as opening up the possibility of increasing social diversity. Households without such pressing housing needs could be given access to social housing, perhaps through the use of quotas or through successful bids on less popular properties.

The aspiration to increase diversity was given a fillip by a landmark Supreme Court judgement (the Ahmad case), which led to CLG issuing a new allocations Code of Guidance. The Court cleared the way for local authorities to revise their allocation schemes in ways that meant that letting a proportion of properties to families in work or those with low housing needs was simply “good housing management” rather than a breach of the statutory duty to give reasonable preference to the vulnerable. This was a change that many local authorities had been lobbying for because they felt that a sustainable future for social housing required improved “quality” of their lettings, diluting poverty, and thereby reducing housing management problems.

Making sense of the way the world has changed

The housing policy world in England, following 16 months of Coalition, looks rather different. But how can we give some structure of our interpretation of what has been happening? One perspective that suggests itself as offering a simple framework through which to examine changes is Kingdon’s Multiple Streams Approach. Kingdon argued that policy change occurs when a window of opportunity opens. And a window of opportunity opens when three streams – the problem, politics and policy stream – align. That is, a problem needs to have been identified, there needs to be political support for dealing with it, and a policy solution that commands political support can be brought to bear upon the problem. Kingdon argues that all three elements need to be in place in order for change to occur.

So how does Coalition housing policy look from this perspective?

Housing policy in the early Coalition era

The politics stream

The Coalition has been helped in moving its radical, Conservative-dominated agenda forward by the particular constellation of political factors.

They faced a badly weakened opposition. Labour has had little or nothing specific to say about housing. Other than being generally against this sort of thing, the party’s position isn’t all that clear. There is a Labour policy review under way. But by the time that has reported some pretty fundamental changes may already have been effected.

Not only are Labour badly weakened but the Liberal Democrats have been largely neutralised by being in Coalition. Elements of the housing agenda the Government is bringing forward are contrary to established Liberal Democrat policy. Or if not against explicit policy then certainly they offend the sensibilities of many Liberal Democrats. But the Lib Dems have not, thus far, been able to change the course of housing policy very significantly. It may well be that there are only so many battles that can be fought within the Coalition and those on health or banking reform, for example, were judged to be more important.

The problem stream

At its most general the housing problem facing the Coalition is one of insufficient available affordable accommodation. The housing market context is one of relatively high house prices and private rents and chaos in the financial system. Although house prices were declining they were (and are) still well out of reach of many households on low and moderate incomes. A shortage of mortgage finance meant that there were households who could sustain a mortgage who could not secure a loan. Increasing private rents compound problems because they make it harder for households to accumulate savings for a deposit.

But that problem can be framed in different way. And, importantly, it is framed in relation to the constraints faced. While some such constraints may be absolute and binding, others are constructed and accepted.

The context of fiscal consolidation meant that, from one perspective, the framing of the housing problem is narrow. One solution – perhaps the traditional British solution –the building of more social housing was ruled out by Government. As in the 1970s, a government commitment to reduce expenditure fed through fairly directly to disproportionate reductions in money going into housing capital spending. But if we rule that out, then policy solutions have to be sought elsewhere. So the problem is how to deal with (the consequences of) high housing costs and housing shortage without putting money into building more properties. Layered on top of that, for good measure, are some vague but erroneous assertions about the highly subsidised nature of social housing – implying that that is an inefficient solution anyway.

On the other hand, there is an element to the construction of the problem where the framing is much broader. The Housing Minister has on several occasions invoked the increase the number of households on social housing waiting lists as an indicator that something must be done to deal with the housing crisis (short of actually building many new properties). Yet, as I noted above, the change in the law in 2002 meant that anyone could register an interest in social housing regardless of whether they have any discernible housing need. It has long been recognised in the sector that waiting list numbers are, therefore, of little use on their own as an indicator of levels of housing need. Yet, it serves the purpose of creating a sense of urgency over the need for change to make the number appear as big as possible. So these niceties of definition are overlooked.

We can also think of the framing of the ‘housing problem’ in broader terms, drawing on more fundamental concerns. A key component of the debate has been the framing of fairness. Two strands have featured heavily. First, there is interpersonal welfare comparisons – arguments that the welfare of those currently excluded from social housing, such as young families living in temporary accommodation, should be prioritized over the welfare of those living in social housing with lower levels of need. Second, there are arguments around the balance of fairness between benefit recipients and taxpayers. This has been primarily directed towards the issue of restricting the local housing allowance going to private sector tenants, but under the cover of this headline the Govt has also smuggled in a nasty restriction on housing benefit going to underoccupying households in the social housing sector.

The policy stream

The Government’s dominant narrative is of social housing as a temporary safety net for those unable to secure housing through the market. We have travelled a long way from social housing as a mass tenure towards social housing as a residual service. That journey started 30 years ago. New Labour showed some willingness to try to reverse the trend. This Government has reasserted that residualisation is the direction of travel. And it’s full speed ahead.

Three changes are, for me, particularly notable.

A key move here is the proposal to allow local authorities to use fixed term tenancies. There could be no greater signal that social housing is now intended as temporary assistance in times of acute need, rather than a settled home. This is an important move by the Government. The proposal to reduce security of tenure has been floating around in the housing policy ether for quite a while. Until now it has been resisted because it was seen as potentially destabilising communities and concentrating poverty, and this was deemed undesirable. Clearly the Conservative arm of the current administration is prioritizing focusing assistance upon those in the most need over these more systemic concerns. The argument that, in the face of area effects, this is potentially self-defeating, cuts no ice.

The original Conservative proposal was for fixed term tenancies of a minimum of two years and reasons for non-renewal could include an improvement in economic circumstances. The perverse incentives involve in such proposals were evident, as was the potential for increasing churn and accelerating residualisation. A consequence of a household bettering its own circumstances would be that it lost its home. Only those truly mired in poverty would be able to stay for the long term in social housing. Fortunately, in the face of strong criticism, some semblance of good sense has prevailed. There is now more emphasis upon “pay to stay” systems, which would see households on higher incomes paying a higher, near market, rent to stay in their home.

The acceptance of the constraint that there is little money for capital investment means that the Government has got to try to boost housing supply without spending much money. The solution is the “affordable” rent regime which allows registered providers to construct properties to be let at 80% market rent. The Government is trading off investment in housing against a commitment to a higher housing benefit bill over the longer term. The impact upon aggregate public expenditure is not going to be much of a saving. What is clear is that from the tenant’s perspective there is a challenge. Higher rents will deepen the benefit trap. My forecast – which requires no great insight – is that affordable rent properties will be occupied either by those who have largely given up hope of entering the labour market or those who do not require assistance from housing benefit. The latter group are likely to be in reasonably well paid employment. So they are not really the households that social housing has focused on in its recent history. You could see this as a move to force a different social mix on the social housing sector, although AR housing is not really social housing, as conventionally understood, so it depends on where you see the boundaries of the sector. One might be tempted to argue that this represents a move for social housing back to its origins as housing for the “aristocracy of the working class”, out of reach of the poor who were left to languish in private rented slums. But it is too early to say that with any certainty.

The third policy move, which perhaps lends weight to the argument that social housing is returning to its roots, is the proposal to redefine homelessness duties to allow local authorities to discharge their duty to statutorily homeless households by securing a 12 month tenancy in the private rented sector. While rehousing in the PRS has long been a possibility, up until now it has required the tenant’s agreement for it to count as a discharge of duty. The Localism bill proposes to remove the requirement to secure the tenant’s agreement, it also shortens the length of tenancy that would be considered discharge of duty. Seeing as a considerable proportion of homelessness is generated by the ending of a tenancy in the private rented sector, this proposal has the potential to set up a bit of a revolving door. The legislation effectively acknowledges this.

This is an interesting policy, if it ends up on the statute book, because something similar was attempted by the Major Government of the early 1990s. It was repealed by the first term Blair government. In fact, Shapps’s current proposals go beyond the Major policy in reducing the level of assistance that local authorities have a duty to provide to homeless households.

That the broader ‘crisis’ in access to accommodation as constructed by the Government has allowed – or been used by – the Government to scale back rights so dramatically is a vivid illustration of the potential for substantial policy change when a window of opportunity not only opens up but is capitalised upon by policy entrepreneurs.

The rethinking of social housing

If we can regain some – even limited – historical perspective it is clear that we have travelled a long way in housing policy terms in a short space of time. Established rights and roles associated with social housing are being unravelled and reconfigured. A policy agenda is being progressed that would have been unthinkable only three or four years ago.

There is much more to say about this. In particular the role of right wing think tanks in pushing solutions that erode established rights and roles needs to be examined in more detail. A variety of interpretations of what is happening will no doubt emerge and be contested. What I don’t think is in doubt is that we have witnessed a rapid reconfiguration of the terms on which the housing policy debate is being conducted. Positions that were seen as on the outer limits of plausibility a few years ago now seem to be the broadly accepted premise from which debate proceeds.

The Government has been cute in the way it has constructed the problem. It seems to have succeeded in gaining widespread acceptance for the argument that the pressures facing the system are so severe that these changes are necessary, inevitable and self-evidently sensible.

The contingency of the arguments and the lack of inevitability of these changes is not hard to demonstrate. The policy agenda towards social housing in embedded in a broader policy context – of welfare reform, planning reform, (lack of) reform in the mortgage market – which is pushing in directions that will increase pressures upon social housing. And these policies move forward on the basis of contradictory justifications. The Government is intensifying the problems it is seeking to solve through its reforms of social housing. Government in “policy incoherence” shock? No doubt. But it is equally a case of the Government capitalising on a window of opportunity to pursue some long-held Conservative policy aspirations, with a particular construction of the crisis and diagnosis of the problem acting as convenient cover.